What's in a mortgage payment
Your monthly housing payment is often called PITI:
- Principal: paying down what you borrowed.
- Interest: the cost of borrowing.
- Taxes: property taxes, often collected monthly into an escrow account.
- Insurance: homeowners insurance, and mortgage insurance if required.
HOA dues, if any, are usually paid separately but still belong in your budget.
Down payment and PMI
Some conventional loans allow as little as 3% down, and FHA loans allow 3.5% for qualified buyers. With less than 20% down on a conventional loan, lenders usually require private mortgage insurance (PMI), which adds to your monthly payment.
Under federal rules, you can generally ask to cancel PMI once your balance is scheduled to reach 80% of your home's original value, and it generally ends automatically at 78%. See the CFPB's guide to removing PMI.
Cash to close
Beyond the down payment, buyers usually pay closing costs, often around 2% to 5% of the price, for things like the appraisal, title insurance and lender fees. Lenders must give you a Loan Estimate within three business days of applying, which makes comparing offers easier.
How much house can you afford?
A common rule of thumb keeps housing costs near 28% of gross monthly income and total debt payments near 36%, though many loan programs allow more. Lenders look at your full financial picture, so getting pre-approved is the best way to know your real budget.
Try our home purchase simulator to explore prices and down payments, then request options from a licensed loan officer.
Frequently asked questions
What is included in a mortgage payment?
Usually principal, interest, property taxes and homeowners insurance (PITI), plus mortgage insurance if your down payment is under 20%. HOA dues are often separate.
How much do I need for a down payment?
Some conventional loans allow 3% down and FHA loans allow 3.5% for qualified buyers. Putting 20% down usually avoids PMI on a conventional loan.
How much is PMI?
It varies with your credit score, down payment and loan, but it's often a fraction of a percent to about 1% or more of the loan amount per year.
When can I stop paying PMI?
On most conventional loans you can ask to cancel PMI when your balance is scheduled to reach 80% of the original home value, and it generally ends automatically at 78%.
Does a 15-year mortgage save money?
A 15-year loan usually has a higher monthly payment but much less total interest than a 30-year loan. Switch the term in the calculator to compare.
About this calculator
This calculator uses standard loan formulas and the numbers you enter. It runs in your browser, doesn't check your credit and doesn't save anything unless you choose to request options. Results are estimates for education only. Lenders set their own limits, rates and fees.
For independent guidance, see the Consumer Financial Protection Bureau's homebuying resources.